TMI Blog2022 (1) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent has discharged the complete service tax liability on the gross amount received by him for providing the taxable services. Once he have discharged the tax liability on the gross consideration received by him by the sale of flats to new buyers, the demand of service tax for the flats handed over to the existing members of the societies without any consideration cannot be sustained. There are no merits in the appeal filed by the revenue - appeal dismissed. - Service Tax Appeal No. 85459 of 2020 and Service Tax Cross Objections No. 85374 of 2020 - A/87397/2021 - Dated:- 31-12-2021 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri Nitin Ranjan, Deputy Commissioner, Authorised Representative, for the Appellant Shri Bharat Raichandani, Advocate, for the Respondent ORDER This appeal filed by revenue is directed against the order in original No 26/MRM-14/THCGST-03/2019 dated 26.11.2019 of the Commissioner, CGST and Central Excise, Thane. By the impugned order, the Commissioner has dropped the entire demand of service tax made from the appellant as per the Show Cause Notice dated 09.10.2018. 2.1 Appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice defined under sub clause (zzzh) of section 65 (105) of the Finance Act, 1994 read with explanatory clause and further read with section 66 E (b) of the Finance Act, 1994; b. Service Tax amounting to ₹ 6,47,88,658/- should not be demanded and recovered from them under provisions of sub section (1) of Section 73 read with Section 66 68 of the Finance Act, 1994, c. Interest as applicable should not be demanded recovered on the amount of service tax recoverable from them under Section 75 of the Finance Act, 1994, d. Penalty should not be imposed on them under Section 77 of the Finance Act, 1994, e. Penalty should not be imposed on them under Section 78 of the Finance Act, 1994. 2.7 Aggrieved by the impugned order revenue has filed this appeal. 2.8 Respondents have filed cross objection to the appeal. 3.1 We have heard Shri Nitin Ranjan, Deputy Commissioner, Authorized Representative for the revenue and Shri Bharat Raichandani, Advocate for the respondents, 3.2 Arguing for the revenue learned Authorized representative, reiterated the grounds taken by the revenue in their appeal, and submitted that the Adjudicating authority has gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zh) : Taxable Service means any service provided or to be provided to any person, by any other person, in relation to construction of a complex; Explanation.- For the purposes of this sub - clause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorized by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer; Section 66E - Declared services. - The following shall constitute declared services namely, 1. 2. construction of a complex, building, civil structure or a part thereof including a complex or building intended for sale to a buyer, wholly or partly except where the entire consideration is received after issuance of completion. certificate by the competent authority. Explanation. - For the purposes of this clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wned by a society, comprising members of the society with each member entitled to his share by way of an apartment. When it becomes necessary after the lapse of a certain period, society or its flat owners may engage a builder/ developer for undertaking re-construction Society/ individual flat owners give 'No Objection Certificate (NOC) or permission to the builder developer, for re-construction. The builder/ developer makes new flats with same or different carpet area of original owners of flats and additionally may also be involved in one or more of the following: . . (i) construct some additional flats for sale to others; (ii) arrange for rental accommodation or rent payments for society members/original owners for stay during the period of re-construction; (iii) pay an additional amount to the original owners of flats in the society. Clarification: Under this model, the builder/developer receives consideration for the construction service provided by him, from two categories of service receivers. First category is the society/members of the society, who transfer development rights over the land (including the permission for additional number of flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the said society, who were flat owners in the said society is not sale and hence is out of ambit and purview of levy of Service Tax. It cannot be denied that entire income of the noticee, in the present transaction, had been generated from sale of fiats to customers others than the existing society members, because, those members were provided flats free of cost. It is not denied in the demand notice that the noticee had paid service tax under construction of residential complex category on such flats which were sold for consideration. The demand notice, seeks to recover service tax under the category of construction of service, and I cannot travel beyond the scope of the demand notice and hence restrict my findings to this extent only. The demand notice is only in respect of the redevelopment agreement and service tax has been demanded only in respect of those flats where were to be allotted to the existing members of the society, therefore, it is not maintainable. 4.3 Revenue has challenged the impugned order stating as follows:- a The Adjudicating authority appears to have erred in considering that the provisions of Section 66E of the Finance Act, 1994 and Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to be given by builder/developer to the land owner towards the land/development rights and to other buyers. If payable, how would the services be valued? Here two important transactions are identifiable: (a) sale of land by the landowner which is not a taxable service, and (b) construction service provided by the builder/ developer. The builder/developer receives consideration for the construction service provided by him, from two categories of service receivers: (a) from landowner: in the form of land/development rights; and (b) from other buyers: normally in cash. Construction service provided by the builder/developer is taxable in case any part of the payment/ development rights of the land was received by the builder/developer before the issuance of completion certificate and the service tax would be required to be paid by builder/developers even for the flats given to the land owner.. i. The clarification issued under Circular F.No. 354/ 311/ 2015 - TRU date 20.01.2016 was solely in respect of Tripartite Business Model , as mentioned in para 2.1. of the Circular No. 151/ 2/ 2012 - ST dated 10.02.2012. Further, though the issue discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th merits we find more merit in the argument of Revenue and hence we reject the arguments of the appellant. 4.4 The only ground that needs to be considered is whether with effect from 01.07.2012, when the scheme of taxation of services was changed from the positive definition of the taxable services to the negative list of taxable services was there any material change in the provisions relating to services chargeable to tax under the category of Construction of Complex Services. Adjudicating authority has in his order analyzed the provisions as they existed prior to and after 01.07.2012, to conclude that the there was no material difference in the provisions as applicable to the facts of present case and has concluded that there was no material difference. Revenue disputes this finding and opines that the there were material changes and therefore the clarification dated 10.02.2012, relied upon by the Adjudicating authority which was applicable for period prior to 01.07.2012, was not applicable, and the clarifications as given by the par 6.2.1 of the Education Guide 2012 should be applied. 4.5 In para 8 of the impugned order adjudicating authority has concluded that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll also be determined accordingly. However, Circular No. 151/2/2012-ST dated 10.2.2012 states that value of land / development rights in the land may not be ascertainable ordinarily and therefore, value, in the case of flats given to first category of service receiver, that is, the land owner, is determinable in terms of section 67(1)(iii) read with rule 3(a) of Service Tax (Determination of Value) Rules, 2006. Accordingly, the value of these flats would be equal to the value of similar flats charged by the builder/developer from the second category of service receivers. In case the prices of flats/houses undergo a change over the period of sale (from the first sale of flat/house in the residential complex to the last sale of the flat/house), the value of similar flats as are sold nearer to the date on which land is being made available for construction should be used for arriving at the value for the purpose of tax. Service tax is liable to be paid by the builder/developer on the 'construction service' involved in the flats to be given to the land owner, at the time when the possession or right in the property of the said flats are transferred to the land owner by entering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lties. It is quite evident that the in this case the period of demand was for period 16.06.2005 to 31.03.2007 i.e. prior 01.07.2012. When the entire appeal of the revenue is based on the changes made in the Law, and it is their case that provisions are materially different, then what makes them rely upon this decision. In our view the reliance placed by the revenue on this decision is totally contrary to their own stand in the appeal. 4.8 In the present case the respondent has discharged the complete service tax liability on the gross amount received by him for providing the taxable services. Once he have discharged the tax liability on the gross consideration received by him by the sale of flats to new buyers, the demand of service tax for the flats handed over to the existing members of the societies without any consideration cannot be sustained. We also find that in case of Vasantha Green Projects [2019 (20) GSTL 568 (T- Hyd)] Hyderabad Bench has observed as follows: 10 . The adjudicating authority, in the impugned order, had relied upon Board Circular No. 151/2/2012-S.T., dated 10-2- 2012 to arrive at the value in the case of flats given to land owners to be det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns which has been certified by Chartered Accountant wherein it is stated that service tax compliance is towards the payment of gross amount of the construction undertaken on joint development basis and received from the customers has been made. This leads to conclusion that it is evident that appellant has complied with the service tax liability on the construction undertaken on joint development basis on the value of construction which is mandated in Section 67 of Finance Act, 1994, read with rules made thereunder. In our view, if once the service tax liability has been discharged on the gross amount, demand of service tax on the same amount again would amount to double taxation. 13 . The reliance placed by Ld. DR on the case of LCS City Makers Pvt. Ltd. will also not carry the case of Revenue any further, as in that case Bench upheld the contention of the Revenue on a recording that the facts and circumstances of the case do not warrant assessment of a different value, for services in respect of flats sold to individual buyers as compared to flat handed over to the land owners ; and recorded that the flats which were allotted to land owners were sold by land owners. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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